Comments on Ukraine by IMF MD Georgieva at FT Climate Capital Conference

March 8, 2022

“The unthinkable happened with Russia’s attack on Ukraine.

We have, again, a war in Europe. And we have, again, mass displacement of people. You used the word 'tragic'—it is tragic, and it is also consequential.

It is consequential, first and foremost for the people of Ukraine.

But it is also creating – while we are still striving to recover from the pandemic – a shock for the world economy.

The war and the sanctions imposed on Russia will have spillovers. First and foremost, for countries neighboring Ukraine and Russia. But, also through commodity price channels, through migration channels, and through confidence channels. There are far-reaching consequences.

It is very relevant for the IMF because Ukraine is our member. And we are there for the people of Ukraine in this terrible moment.

What we do is threefold.

First , immediate financial assistance for Ukraine.

Today, we have sent to our Executive Board a proposal they will consider for approval tomorrow for $1.4 billion in support for Ukraine, to help it cope with the shock caused by this war. We also disbursed $700 million to Ukraine in December. And we have provided a Special Drawing Rights allocation of $2.7 billion that was very handy to Ukraine at this moment.

Second , we have changed the focus of our ongoing discussions with the Ukrainian authorities from 'reforms' to 'crisis management’.

IMF staff is in daily contact with the key people on the Ukrainian side. And I can tell you, it's so impressive to see how they are working together with dedication and professionalism, despite sirens that can be heard even as discussions go on.

And third, we are helping to mobilize financial support and resources. The IMF and the World Bank are the two institutions that are often tasked to channel coordinated assistance to countries in need. Today we need to help support Ukraine to get through this shock, but there will come a moment of reconstruction for Ukraine. And at that point, President Zelenskyy told me, he wants the Fund to take the lead to make sure this happens.

So, this is first and foremost about Ukraine, but of course we are also looking at the economic consequences across the world—and about how best to support our members.

Already some of the immediate neighbors that are directly impacted by this conflict are asking the IMF for more help. For example, Moldova has asked us to increase our assistance. And we will do all we can for our members in need of support....”

“...In terms of the global economy, it is too early to determine with any certainty what exactly the impacts are going to be.

But it is clear what the transmission channels are – from the war, but also from the sanctions on Russia.

The first transmission channel is commodity prices. Especially energy prices, but also food prices. And we are especially assessing what may be the needs of those most severely impacted in a negative way.

The second transmission channel is migration, and it is particularly significant for neighboring countries. It needs to be carefully watched because obviously we don't want to see a negative spillover for neighbors. So far, the neighbors have been fantastic. And to the extent we may be called to help, we will be there.

And the third transmission channel is the most difficult to assess, and that is confidence. Clearly, what we see is that there is an erosion of business confidence. But if you look carefully at this impact, very clearly there are two countries which are most dramatically hit — Ukraine by the war and Russia by the sanctions.

We don't yet have an accurate estimate of how much the Russian economy could shrink. But certainly, a recession is on the horizon as a very likely outcome for Russia.

When you look at the rest of the world, there is a variety of reactions and questions, including whether the international community would hold together in this crisis. And institutions like the Fund will play, among other things, a role in bringing policymakers together—so there is confidence that there will be an adequate response."

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